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Renewable Energy is a Bright Spot in the Energy Sector

Renewable energy is performing well through this crisis and for good reason. While fossil fuels (and their supply chains) have been hard hit as travel comes to a standstill and businesses remain shut, the renewable sector continues to hold up well. New projects are starting, and investors are still active.

Costs of solar energy has decreased in line with the market but the cost of producing and maintaining energy from renewables has reduced considerably in the last 10 years. This has been driven by the advancements in technology, resulting in a price reduction.

As we have written before, demand for energy and the energy sector has fallen sharply during the crisis, with WTI entering negative territory last month, before recovering. For many oil producers, the current price is still too low.

A report from the international energy agency (see link below) is forecasting a 5% gain on wind, solar, hydro this year. Some of these projects have been in pipeline and naturally concluding, however new projects are coming online.

The demand for renewable energy is closely correlated to low electricity demand overall. During these periods of low demand, fossil fuels like gas and coal get switched off and energy distributors switch to renewable energy – this is bought first.

Renewable energy sources will continue to grow and increase its percentage of global power production. This will continue. Long term is positive.

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